Gautam Seth
Nov 17, 2016

Consumers don’t buy products, they hire help

CHINA INNOVATION 2016: Nielsen's Gautam Seth guides brands on how to stay at the forefront of self-reinvention.

Consumers don’t buy products, they hire help

To identify white space for innovation in China, manufacturers must realise that consumers don’t just buy products or services, but 'hire' them to do a 'job' in their day to day lives, be it the food or drinks they consume, the kind of laundry detergent or personal care items they use.

All of these have to serve a purpose unique and personal to each consumer. For the scale and diversity of China, it becomes crucial to identify new purposes, new needs, new advantages as ways to expand your consumer base.

From a research perspective, this means to holistically understand consumers and their current usage of existing products, then identify unmet needs within a product category or a set of categories, to then quantify white space opportunities for the future. This can be accomplished through primary research as well as leveraging big data. 

For FMCG brands, here is a recap of the current consumer trends in the Chinese market:

  • Increased demand of affordable luxury
  • Growth of urban middle-class consumers with greater access to information through connectivity. Today, people get exposed to a lot of advertising through various media vehicles and a massive assortment of products in-store and on e-commerce sites. 
  • More generational differentiation with families with more kids and more 'silvers' in the same households
  • Bigger fragmentation of needs and values results in fragmentation of product benefits, media consumption habits and retail environments.

These create both a challenge and opportunity for manufacturers to innovate with their products, marketing, media practices, supply chains and retail business models to win in China's 'new normal'.

Each company has to find a balance between understanding its consumers and understanding their internal processes, in order to develop a winning formula for innovation.

See all of our annual CHINA INNOVATION features

Manufacturers that have succeeded in China in recent years have done one or more of the following:

1.       Accelerated their go-to-market speed from ideation to launch
2.       Understood local consumer needs versus bringing over products from elsewhere
3.       Embraced disruptive business models and new technologies (e.g. app-based engagement)
4.       Stayed ahead of trends or created new trends
5.       Built an inclusive and open innovation culture

To share a few examples, non-silicone shampoos, bubble milk teas, sharing packs for snacks, and traditional Chinese medicinal ingredients in skincare were all 'white spaces' or 'new jobs' that Nielsen China helped identify.

Many developing markets like Indonesia, Turkey, India, Thailand, Vietnam, Brazil, Mexico and South Africa, just to name a few, have similar challenges as China: big scale in number of consumers, highly fragmented needs, aggressive local competitors and an evolving media and retail environment. Brands working in these markets could learn a lot from how their peers have won in a similar situation in China. That said, there is still a long way to go for marketers in China to maintain their positions in the mainland. They should be looking outward to other developing markets for new lessons.

Good innovations solve problems that formerly had inadequate solutions, or no solutions at all. Finding those solutions is the most exciting aspect for me and my team. At the end of the day, innovations have to improve our lives, make it simpler, and do good for society. 

Gautam Seth is Nielsen's Innovation Practice Greater China lead



Related Articles

Just Published

5 hours ago

Twitter resurrects tweets from stars that brought ...

Twitter says: 'If you can dream it, tweet it.'

6 hours ago

Samsung shows where to look for a real gaming ...

WATCH: The film by BBH takes you down a rabbit hole, literally.

6 hours ago

Essence names Tim Irwin as new global COO

Irwin previously lead EMEA for the agency and will be succeeded by Ryan Storrar.

15 hours ago

‘We can’t just copy-paste elements from the West’: ...

Chair of the newly launched DEI committee Charu Srivastava discusses localising the DEI agenda, the importance of holistic change beyond policy, and why inclusive agencies can be a magnet for talent.